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Opinion articles of the week:

Financial Times claims Ten years after Lehman collapse few lessons have been heeded

1. WONGA COLLAPSES

Payday lender Wonga has fallen into administration. The company has been struggling with new lending regulations and has paid out millions in compensation claims due to poor practices. The company has been in the red for nearly four years and its now deciding to shut up shop.

Founded in 2007, they thrived in the wake of the 2008 financial crisis when retail bank lending seized up. In 2012 they made £84 million in profit and it was even exploring IPO options. The rates on these loans however, were exorbitant. Some customers paid as much as 4,000% and a public outcry began against payday lenders.

From 2014, the government launched a crackdown against the industry. Countless customers were left with crippling debts from these extortionate loans. The FCA imposed a new cap on payday loan rates. Interest rates could be a maximum of 0.8% per day on the amount borrowed and customers could only pay 100% of the amount borrowed in interest. Many lenders shut down immediately after this but larger lenders like Wonga sank into a downward spiral.

Wonga faced numerous actions against it. In 2014, the FCA ordered Wonga to pay £2.6 million to compensate customers for their poor practices. The company was also forced to write of £220 million of debts. By 2016, the company made a loss of £65 million.

In spite of the collapse, people will still have to make loan repayments and collections will be carried out by the administrators. Unfortunately, creditors of Wonga are unlikely to see their all of their money. (BBC News)

2. COCA-COLA ACQUIRES COSTA

Coca-Cola has announced it will acquire Costa Coffee for £3.9 billion. This comes only a few months after Whit bread announced plans to divest in the coffee chain. This sale is a major profit for Whitbread. In 1995, they acquired Costa for just £19 million. Now it has over 2400 coffee shops in the UK alone with an additional 1400 outlets overseas. It currently has the most outlets in Europe. Coke admired the strength that the Costa brand had developed. It deemed Costa a “winning brand” to add to its portfolio. (BBC News)

As a whole the coffee industry is one of the few success stories on our high street. Last year in the UK, research showed 3.4 new coffee shops open every day on our high streets.

3. VODAFONE AUSTRALIA MERGER

Vodafone’s Australian business has agreed to merge with TPG Telecom in a £8.4 billion deal. The company will be called TPG Telecom due to it’s TPG’s current Australian stock market listing. Vodafone Hutchison Australia (VHA) and TPG will take a 50.1% and 49.9% stake in the combined company respectively. VHA is currently owned by Vodafone and CK Hutchison.

The merger will allow the company to compete at the top level in the mobile and broadband sector. Currently, Telstra and Optus dominate the market but the tide is changing. Telstra is facing tougher competition. No doubt the TPG will increase pressure on the company. The deal is still subject to approval by the Australian Competition and Consumer Commission who will soon begin a public review of the deal. (Sky News)

4. ASTON MARTIN IPO

Aston Martin is set to list on the London Stock Exchange. The luxury car manufacturer will list £1 billion of stock. Most of the stock will be sold by existing shareholders but the company will issue some new stock. This listing would value the company at roughly £5 billion. An intention to float will be announced shortly. According to reports Deutsche Bank, Goldman Sachs and JPMorgan are joint global coordinators.

The company has performed a strong turnaround from years of financial difficulty. The company has expanded into new markets such as China which has helped business significantly. It posted record sales of £876 million last year with a £87m profit.

Aston Martin is best known for its development of James Bond vehicles. The UK based manufacturer produces the DB11, Vantage and Rapide models. It currently employs 2700 people globally. It too will join the electric revolution and by 2025 all models will be hybrid or battery powered. (BBC News)

5. ARGENTINA FINANCIAL TROUBLES

Argentina’s government has requested the early release of a $50 billion IMF loan. In May, Argentina claimed they did not plan to use the money when they agreed the terms. President Macri claims that the money is to restore confidence in the economy but analysts believe the government is in desperate need in order to meet its obligations. The peso has collapsed amid concerns that it will default on its debts. The Argentine peso has dropped 40% against the dollar in 2018 alone.

Argentina’s fortunes have changed rapidly. Last year, the country issued a 100 year bond. Countries do not issue these unless they are confident in the long-term strength of their country. Argentina defaulted on its debt in 2001 and this had a devastating impact. There were significant constraints on bank withdrawals and Argentina’s economy faltered.

6. JULIUS BAER BACKS BREXIT BRITAIN

Swiss bank Julius Baer is seeking to increase its assets under management in the UK and Ireland by 43%.The bank is currently investing in its northern England offices. By 2020 it hopes to have £20 billion of assets under management is 2020. In 2018 so far, it has hired 30 bankers and support staff in Manchester, Leeds and Edinburgh. The cost-to-income ratio for its Leeds offices is currently 17% below that bank’s median rate. Despite this, the bank is looking to double-down on the UK as it sees the opportunities that may Brexit provides for it. The bank caters to high net worth individuals, many of whom are entrepreneurs. The weakened pound boosts exports which benefits a large proportion of the bank’s clients. In addition, the bank expects numerous clients to request advice regardless of the outcome of negotiations. (Bloomberg)

7. TOYOTA INVESTS IN UBER

Toyota has invested $500 million in Uber. This forms part of a collaboration to develop driverless cars. The project will see driverless Toyota vehicles on Uber’s car sharing network. The first fleet will launch in 2021. The development of Self driving vehicles has not been without hiccups. Uber’s self driving taxi killed a pedestrian this year while Tesla’s autonomous vehicles have also been responsible for a number of deaths. While self driving cars look to be the future of personal transport, there is much work on safety to be done. (The Independent)

8. VIAGOGO FACES LEGAL ACTION

Online ticket resale site Viagogo has been sued by the Competition and Markets Authority (CMA). The CMA claims that the platform was breaking consumer rights law, in spite of warnings. Viagogo customers are not informed whether they could be refused entry at the door where venues operate limits on resold tickets. The CMA claims this contravenes consumer protection laws. StubHub, GETMEIN and Seatwave all previously agree to introduce changes to become compliant.

The legal action by the CMA forms part of a wider crackdown on ticket resale sites. Consumers have long complained of rip-off prices and a lack of transparency. Regulators are now taking a tougher stance on platforms. (Sky News)

This news comes only two weeks after Ticketmaster announced it would shut down two of its sites, GETMEIN and Seatwave. Despite, their compliance with the consumer protection laws, TicketMaster wanted to create a fairer environment for fans. These resale sites will replaced by customer exchange platforms. On these platforms, sellers will only be able to charge a maximum of 15% above face value price.

9. PWC GOES SUPER FLEXIBLE

PwC has introduced a new scheme allowing new employees to work when they want. Their new flexible talent network allows workers freedom to decide their working hours. Employees are assigned to projects rather than general roles. Over 2000 workers have registered for the scheme already.

This signifies the general shift in working patterns. Research showed 46% of workers prioritise work life balance as most important when choosing a job. Employers are now taking heed and allowing workers mode flexible working schedules. Flexible working is becoming more common place at many work places. How many offer flexible working

While this is welcome progress, not all work places will be able to follow suit. Despite many law firms adopting flexible working, many city lawyers work 60 hour weeks on average, if not more. Where schedules are largely determined by markets or constant client demands the 9-5 (or 9-9) working day will always have a role to play.

10. DYSON’S ELECTIRC CAR PLANS

Dyson has revealed plans for a test track for its new electric cars. From 2021 Dyson aims to enter the electric market with a “radical design”. The site for the test track is a redeveloped airfield and cost £84 million. The test track itself will cost £200 million in total. Dyson plans to spend £1 billion developing the car and £1 billion on battery production.

While many competitors like Tesla and Volkswagen have begun releasing models, Dyson’s project is still in its infancy. No prototype has been developed yet nor has a manufacturing location been revealed. In Dyson’s case, slow and steady wins the race. Sir James Dyson famously tested 5127 prototypes before landing on his final design for a vacuum cleaner. Now the firm just manufactured its 100 millionth machine and made £3.5 billion in sales last year. Dyson may be able to replicate this success in the electric car industry as well. (This is Money)